Specialty cosmetics retail stores becoming more popular with consumers: report

Specialty retail stores such as Sephora and Ulta are becoming more popular with consumers of luxury beauty and cosmetics products, according to a new report from Unity Marketing.

The ‘Personal Luxury Report 2010’ revealed that while department stores are still the number one destination for affluent shoppers (those with an annual income of $100,000+), they are losing share in favor of specialty stores.

"Such stores are popular as they let the consumer shop the way they want to shop, across brands. Department store beauty retailing is all organized by brands and if you want to pick and choose across brands, they make it hard. Specialty retailers offer shopping experiences people want," Unity Marketing President Pam Danziger told CosmeticsDesign.com USA.

It was also highlighted that fewer affluent consumers bought personal luxury products, although those who did spent a 'greater share of their wallet. With regards to luxury cosmetics, this increased 63.1 percent in 2009.

“The personal luxuries market has changed by more than just who is buying and how much they are spending. Affluent consumers are also buying a different basket of personal luxury items from a different slate of distribution channels,” said Danziger..

Drop in number of consumers indulging in personal luxury items

According to Unity Marketing, there are 22 million affluent households in the US, representing a potentially lucrative market for prestige cosmetics and personal care brands.

A survey sample of 4,739 luxury affluent consumers with an average income of $220,200 revealed that 44 percent of affluent consumers purchased personal luxury items in 2009, a drop of 10 per cent when compared to the 2006 statistic.

"Despite lower purchase levels, the affluents who bought personal luxuries in 2009 spent nearly 50 percent more on their purchases than they did in 2008,” commented Danziger.

“This indicates a trend toward a smaller group of high-spending consumers that must be carefully targeted in order for marketers and companies to remain healthy," she added.

Luxury brands need to expand distribution channels

According to Danziger, although the luxury market has in general been hesitant to enter mainstream distribution channels, doing so may be a way to boost sales, as consumers are looking for flexibility that the traditional department store channel does not offer.

“Prestige beauty brands need to open up distribution to where all consumers are looking for products,” she said.

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